How To Review Statement of Work? Never Miss These 6 Checkpoints!

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As a customer Project Sponsor, you cannot afford to overlook Statement of Work (SOW). SOW is one of the most critical documents in ERP implementations. It includes detailed information about project scope, estimate, timeline, role and responsibility. It tells you what you will get from the vendor with the investment you will be making. The approved document sets a baseline for scope, budget and project timeline. Any changes to this baseline attract a separate Work Order. We call this a Change request or Variation request. It means that you pay an extra sum to cover any Change requests within the Project.

By signing the SOW, you make your commitment to the capital expenditure and internal resources for the Project.

Before making this commitment, it is vital to understand SOW inside out along with your team.

Statement of Work

If you are not careful, you are likely to experience bitter surprises during the Project. So, take the time, assesses the risks and manages them. While reviewing and approving SOW, your main aim should be:

  • Working with the vendor for a win-win partnership
  • Risk Assessment and Management
  • Clarity and alignment between vendor and your organisation

The following points will guide you on which areas you should direct your focus:

1. Project Scope – The ins and outs

In an SOW, there are various elements of the project scope. The following are a few examples:

  • ERP modules planned for implementation
  • Integration among different systems
  • Sites intended for ERP rollout
  • Financial companies that are in scope
  • Functional and non-functional requirements
  • Data Migration
  • Reports, Dashboards, Outputs and Business Intelligence reporting

You need responsible individuals within your organisation to review the scope. They should report if the scope is unclear or SOW has unnecessary scope. For example, if specific ERP modules are not in scope but listed under SOW.

2. Responsibility – Who is doing what?

Ensure there is no confusion on who will be doing what when the Project starts. SOW should define the role and responsibilities of the project team. For example, SOW should list which tasks out of the following is the vendor responsibility:

  • Configuring the ERP system
  • Developing customisations with ERP, where required
  • Various types of testing (Unit, System Integration, Load and Stress Testing, Security)
  • Migrating data from existing system(s) to ERP
  • ERP integration(s) with the other systems
  • Standard operational reports (Executive, Sales, Finance, Manufacturing)
  • Designing and developing outputs (Invoice, Purchase Order, Credit Note, Statement)
  • End-User training
  • Change Management/Project Management

For the items that are the responsibility of the vendor, identify what your team has to do? How much effort your team needs to commit?

If there are many vendors, then clarity of the role and responsibility of each vendor is vital. There should be clear owners of each project activity and deliverable.

3. Estimate – The summary of project budget

Get your team to check that consulting rate, effort estimate, and calculations are accurate. For estimates, check vendor assumptions and assess if they are realistic or too vague.

Consider the following example:

Item: Reports

Estimate: 30 hours

Assumptions: 5 simple reports

The vendor assumption is that you need 5 reports that are simple to develop. So, check with your team how many reports you need. Work with the vendor to define the meaning of a simple report. You will see such examples throughout the SOW, so be careful.

4. Plan – The Project journey

Get your team to assess the Project Schedule/Plan proposed by the vendor. Check if your team understands and agrees on their responsibility within the Project. Ensure that the vendor has allocated enough time for the tasks that your team will do. The plan should be realistic and considerate of busy times within your business. For example, month-end, audit.

5. Assumptions – Interrogate them all!

Get your team to assess all assumptions thoroughly. Ensure that the statements are reasonable. Note that this is the area in SOW where most of the risks are transferred to you. So, check every assumption and try to reduce them as much as possible.

6. No pressure – Take your time!

You may get pressure from the vendor to sign the SOW by a particular day. For example, the discounts are valid by Month-end/Financial year-end. Though deadlines are essential, though in this instance, you should not rush. Take your time, do the right things to understand SOW, assess risk, and sign it confidently.

To conclude, though you may be responsible for approving the SOW, you may not know all the finer details within the SOW. So, engage with the right resources in your team and check the different SOW aspects. Remember that your objective is to work with the vendor for a win-win partnership. You want to ensure that both your team and vendors teams fully understand SOW. This way, you mitigate risks and set a foundation for successful ERP implementation.

Take the time and effort to do justice with the document at the start. You will be glad you have done this right upfront!

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